J.C. Penney Sales On Broad-Based Strength -- Update
November 13 2015 - 8:49AM
Dow Jones News
By Anne Steele
J.C. Penney Co. reported better-than-expected sales growth of
4.8%, citing strength in all of its merchandise divisions, and
lifted profit estimates for the year.
Still, shares of Penney fell 2.5% to $8.57 in premarket trading
as other mall-based retailers have warned about weak spending by
consumers heading into the holiday season.
Penney didn't offer specific commentary about the current
quarter but did raise its earnings outlook for the year. The
company said it now expects adjusted earnings before interest,
taxes, depreciation and amortization of $645 million, up from its
August estimate of $620 million.
On Thursday, Nordstrom Inc. cut its profit and sales forecasts,
saying it didn't expect consumer trends to improve in the fourth
quarter. Macy's Inc., meanwhile, warned Wednesday that it would
have to make heavy markdowns to clear unsold goods after sales fell
short in its most recent period.
As for the third quarter, Penney said all of its merchandise
divisions reported sales growth at established stores from a year
ago. Among the company's top-performing divisions were men's, home,
footwear, handbags and the cosmetics chain Sephora, Penney
said.
Overall, Penney's loss--which reflects the company's
restructuring costs--narrowed to $137 million, or 45 cents a share,
from $188 million, or 62 cents a share, a year earlier. Analysts
polled by Thomson Reuters had expected a loss of 55 cents a
share.
The company said its adjusted earnings before interest, taxes,
depreciation and amortization improved by $83 million in the third
quarter to $108 million.
Sales rose to $2.9 billion from $2.76 billion, better than
analysts' forecast of $2.88 billion. Sales at existing stores rose
6.4%, which the company had reported Wednesday.
Gross margin widened to 37.3% from 36.6% a year earlier, helped
by improvements in clearance and promotions.
The results in the latest quarter suggest continued progress by
Penney in climbing out of the hole that it fell into under former
CEO Ron Johnson. Mr. Johnson, a former Apple Inc. executive,
crushed sales by doing away with discounts and popular house
brands.
Mike Ullman, who handed over the chief executive role to Marvin
Ellison on Aug. 1, reversed many of those changes.
"The continuation of our strong sales performance this quarter
demonstrates ongoing progress towards achieving the company's
long-term financial targets," Mr. Ellison said Friday,
acknowledging that significant work remains to be done.
Write to Anne Steele at Anne.Steele@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
November 13, 2015 08:34 ET (13:34 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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